Where's all the money? There are supposed to be great heaping gobs of money piling up in Halliburton's tower downtown.

Halliburton, often berated as a corporate buddy of the Bush administration, was awarded the famous no-bid contract to rebuild Iraq's oil fields and holds a broader government logistics agreement known as LOGCAP under which it feeds and supports U.S. troops in Iraq and Afghanistan.

Now that LOGCAP is winding down, Halliburton executives must be counting all the loot from such exclusive agreements, right?

According to critics, the whole arrangement was some sort of seedy backroom deal — hatched during the planning of the Iraq invasion — that was supposed to secure big money for Halliburton.

So where is it? It doesn't show up on Halliburton's income statement. The company's quarterly financial results, filed late last month, show its work in Iraq — including a separate, competitively bid contract for oil-field work — garnered just $74 million in profit on about $2.4 billion in revenue for the first half of the year. That's a margin of about 3 percent, and it's about the best Halliburton has seen from the Iraq contracts, which are administered through its KBR engineering and construction unit.

In fact, for all of last year, Halliburton's Iraq work generated a profit of $172 million, or just 6 percent of the company's operating income. And that was a banner performance. In the two previous years, profit on the Iraq work dipped as low as $78 million with a margin of a measly 1.1 percent. With the return Halliburton's gotten, it would have done more for its shareholders by investing in Treasury bills and generated far less controversy in the process.

In a prepared statement, spokeswoman Melissa Norcross said although the margins are lower than in Halliburton's energy services business, the military work requires less capital investment and involves less financial risk.

I'm no fan of secret government deals, especially not when they're doled out to a company that the vice president used to run. In this case, though, the joke may be on the contractor.

In fact, it was Dick Cheney, as defense secretary during the first Bush administration, who railed against cost overruns in government contracting — even canceling the development of the A-12 attack plane for falling behind in its budget and production schedule — and championed the kind of cost-plus agreements now responsible for Halliburton's paltry returns.

Having lost the LOGCAP contract during part of the 1990s, Halliburton floated a low-ball offer in 2001 to win it back. It agreed to a 1 percent return on top of its costs, with the potential for as much as 2 percent more based on performance.

'Sufficient' return?

Several years ago, I asked Chief Executive Dave Lesar about the profitability of the Iraq work. He told me that criticism that the company is a war profiteer making big bucks off the Iraq work was simply wrong and unfair.

"We don't make a lot of money at it," he said.

The return, he argued, was "sufficient" for Halliburton shareholders.

Sufficient, perhaps, if everything goes off without a hitch, which hasn't been the case. Halliburton's Iraq work has been dogged by claims of overbilling, with government audits uncovering some $1 billion in questionable charges. Halliburton has maintained its billing is proper, and the Army has defended its performance.

Given that Halliburton's earned about $400 million on its Iraq work during the past three and a half years, and factoring in legal expenses and other potential costs, its profit in Iraq is hardly the windfall critics portray.

Then there's the cost of bad publicity, the kind of attention that transformed a company known mostly in the Oil Patch into joke fodder for late-night talk shows and a target for protestors who doused themselves in fake blood at the annual meeting.

Distancing itself

Halliburton said earlier this year it will move forward with long-expected plans to separate itself from KBR. The move may unlock some more value for shareholders, and it will give Halliburton a buffer for the controversy of its Iraq work.

The Army said last month it will discontinue the current LOGCAP contract and will begin soliciting competitive bids for a new program. The new LOGCAP will be split among three contractors, with a fourth hired to monitor the performance of the other three. The structure is designed to eliminate the military's dependence on a single company. Halliburton is free to submit a bid, although it hasn't said if it will or if it will simply say good riddance.